ISLAMABAD (Reuters) - Pakistan’s economy will grow 5.8 percent this fiscal year, the fastest pace in 13 years, the country’s de facto finance minister, Miftah Ismail, said on Thursday, a day before he announces the 2018/2019 budget.
Pakistan’s economy has seen growth accelerate in recent years but it has not been without problems. The World Bank and the International Monetary Fund have warned that the country’s macro-economic picture has been deteriorating as its current account deficit widens.
Pakistan’s foreign reserves have also been dwindling amid a consumer boom and a spike in imports, including machinery for Chinese projects that form part of the Belt and Road initiative.
Ismail, speaking to reporters alongside Pakistan’s Planning Commission Minister Ahsan Iqbal at the launch of the Economic Survey of Pakistan, said growth for 2016/2017 (July-June) has been revised to 5.4 percent from 5.28 percent.
He said the country’s economic outlook is in a strong position, adding that agriculture, industry and services grew 3.81 percent, 5.80 percent and 6.43 percent, respectively.
“This year the growth we have achieved is 5.79 per cent,” Ismail said. Average inflation of the current fiscal year has been contained at 3.78 percent, he said, compared with 4.01 percent in the same period last year. “When we came in 2013, the inflation was 7.9 percent,” he said.
The government has in recent months devalued the rupee, imposed tariffs on imported goods and sought to boost exports to reduce growing balance of payments pressures.
Ismail said that he supported devaluing the rupee against the dollar twice in recent months to arrest the current account deficit, which had also put pressure on country’s foreign reserves.
A decline in exports in the last two to three years - the main reason for the current account deficit - and disappointing foreign inflows and slow global growth in international trade flows remained the risks and challenges on domestic and external front, the economic survey highlighted.
However, it said, the declining trend has started to fade out. The current fiscal year has seen a continued rise in exports with a 12.0 percent growth. Imports have slowed to 16.6 percent compared with 48 percent at the start of the year.
Writing by Asif Shahzad, editing by Larry King